The Foundation for Enhancing Communities and Conrad M. Siegel, Fellow, Society of Actuaries, Investment Advisor Representative, Former Chair of TFEC, Former Chair of Investment Advisor Committee and current Member of Investment Advisory Committee have just completed an analysis of their investment and spending policies which were implemented in 1996 to include passive management using mutual funds and total return including realized and unrealized appreciation as the basis of measuring returns to individual funds. This analysis covers the period thru December 31, 2015 which encompasses a 20 year history. The results are both impressive and rewarding given the fact that over this 20 year period many changes occurred throughout the world which drastically effected the markets thus making it difficult to stay the course, ride out the rough patches and reap the rewards as indicated in the chart below:
Average Annual Returns1 vs. Benchmarks3
| Year | Model E 100% Equities |
Benchmark | Model A 70% Equities & 30% Fixed Income |
Benchmark | Model F 100% Fixed Income |
Benchmark | Rank | Percentile |
| 1 yr | -0.9% | -0.7% | -1.0% | -0.5% | -0.6% | 0.6% | 38 of 154 | 76% |
| 3 yrs | 12.3% | 11.9% | 8.2% | 8.6% | -0.2% | 1.4% | 1 of 151 | 100% |
| 5 yrs | 9.9% | 9.7% | 7.1% | 7.6% | 1.7% | 3.2% | 1 of 146 | 100% |
| 10 yrs | 6.6% | 6.2% | 5.9% | 6.1% | 3.4% | 4.5% | 6 of 117 | 95% |
| 20 yrs | 8.1% | 7.8% | 7.4% | 7.4% | – | – | 2 of 56 | 97% |
| Benchmarks | 55% S&P 500, 25% Russell 2000, 20% MSCI-EAFE | 34% S&P 500, 19% Russell 2000, 17% MSCI-EAFE, 30% BarCap US Aggregate Bond |
100% BarCap US Aggregate Bond4 | Fiscal and Administrative Officers Group (FAOG) Community Foundation Survey 4th Quarter 2015 | ||||
| 1 | Results are net of fees included in the mutual funds but before TFEC’s fee for investment and fund management and are as of 12/31. |
| 3 | Benchmark returns are unmanaged and do not incur fees. In 2004, the benchmarks were adjusted because small cap and international allocations were increased. In 2003 and prior years, the Model E equity benchmark was 70% S&P 500, 20% Russell 2000 and 10% MSCI-EAFE, and Model A’s benchmark was 49%, 33%, and 7%, respectively. |
| 4 | To minimize market fluctuations, the fixed income component is invested in funds that focus on high quality, intermediate term bonds. It is heavily weighted to U.S. Government bonds. |
